Canadian Plastics

China manufacturing falls to 11-month low

With the number of new factory orders deteriorating at an ever-faster rate, China’s manufacturing fell to an 11-month low in July, according to a new report released by HSBC Corp.

July 24, 2013   Canadian Plastics

With the number of new factory orders deteriorating at an ever-faster rate, China’s manufacturing fell to an 11-month low in July, according to a new report released by HSBC Corp.

HSBC said the preliminary version of its monthly purchasing managers index declined to 47.7 this month from June’s 48.2 on a 100-point scale on which numbers below 50 show a contraction in activity.

The decline adds to pressure on the labour market and “reinforces the need to introduce additional fine-tuning measures to stabilize growth,” said HSBC economist Hongbin Qu in a statement.

China’s slowdown is largely self-imposed, the report noted. The government has tightened controls on investment and real estate development as part of its effort to shift the basis of growth. But a slump in global demand for Chinese goods has hurt exporters and pushed growth down more sharply than expected. Growth also has been dented by a crackdown this year on a boom in bank lending. Tighter lending controls caused a temporary shortage of credit in financial markets last month. Further controls, especially on unregulated private lending that support entrepreneurs, could hurt companies that generate most of China’s new jobs and wealth.

On a related note, the International Monetary Fund cut its 2013 growth forecast for China this month to 7.8% from its 8.1% outlook in April.

Companies reported output and orders declined at a faster rate this month, according to HSBC. The preliminary report is based on 85% to 90% of responses from the 420 manufacturing companies surveyed each month.


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